The overall goal of this proposal is to elucidate the biochemical and embryological function of the Transforming Growth Factor-B (TGF-B) pathway in the induction and patterning of the mesodermal embryonic germ layer in Xenopus. By combining expression cloning in Xenopus embryos, global transcriptional profiling, and biochemical approaches during the last round of funding, we have identified key factors which modulate the TGF-B pathway at multiple levels in the generation of the primary embryonic axis and the establishment of discrete cell fates. Building on this progress, we will focus on two of these factors that are unusual regulators of the TGFB pathway: Coco, acting outside of the cell, and SCP2, the first identified Smad phosphatase, acting in the nucleus. I have two main objectives. The first is to dissect the molecular mechanism underlying the biochemical function of coco in the context of the very early embryo. This will be done by eliminating Coco from the fertilized eggs and assess the consequence of this loss of function on the development of the embryo. In line with this mechanistic analysis, embryonic factors that interact with Coco protein will be identified to unveil Coco-partners. The second aim, targets the unraveling of the biochemical, cellular and embryological function of long awaited players in the TGFB pathway, Smad phosphatases, which we have finally identified. We will also extend this analysis to individual family members of this group by addressing comparatively their biochemical and embryological functions. The TGFB pathway has been evolutionarily conserved from C. elegans to human, covering an amazing range of biological activities both in embryogenesis and adult life. Mutations in this pathway are the causes of various diseases including developmental disorders and human cancer. Therefore, the findings derived from the studies presented in this application extend beyond their relevance to our basic molecular understanding of embryological events, and reach our knowledge about this important signaling pathway, reiterated again and again in different tissues and cell type throughout life. [unreadable] [unreadable] [unreadable]